How to start a small business

Ever dreamed of escaping the rat race, becoming your own boss, or just earning some extra money? Well perhaps you want to join the one in six people in the UK who have started their own business or have become self-employed.

Starting your own business can seem a bit scary, particularly when you’re looking at the confusing world of business structures, record keeping and Self Assessment tax returns. But is it really that difficult to start a small business?

Thinking of starting a business

Fed up with the daily grind, or just looking for a more flexible work life balance?

Being self-employed or starting your own business, gives you the chance to do something you’re passionate about, choose your own hours and work around other commitments like childcare.

But beware! It’s not all plain sailing. You might have to work long hours, or weekends, cope with an irregular income and have to do your own record keeping and tax returns.

How to start a business with no money

It can cost quite a bit to get a business off the ground, however it’s not impossible to get started with little or no money.

Depending on what your business will do, there are a lot of ways to save.

If you already have a laptop, you don’t need to buy a new one for work, or perhaps you can get by using your smartphone or tablet.

Creating social media profiles for your business might make it easier to connect to people in your local area and mean you don’t need a website or to splash out on adverts in newspapers.

Setting up a business from home is another good way to save money on start-up costs. After all, do you really need an expensive shop front or office when you’re trying to get your business established?

But, there are some future costs you won’t be able to avoid, like your tax bill. So, it’s a good idea to plan early on how you will pay for these things.

How to start a business?

Starting a business from scratch can look like a daunting task. And it can seem like there’s a lot of things to think about. Worst of all, a lot of these things can seem quite boring. But unfortunately, they’re also quite important.

The first thing is your business structure. You can keep it simple and just be a sole trader, or, if you’re going into business with other people, register as a partnership or private limited company.

Next, you need to think about how much money you can spend on the business. But remember, you will still have your personal costs, like rent and food to cover.

If you want to raise money to start your business, or just want to develop your short and medium-term goals, then you might want to write up a formal business plan.

You’ll also need to think of how you’re going to keep track of your income and expenses. A spreadsheet might work for you, but there are a wide range of bookkeeping software on the market.

And why is keeping good records important? Because at some point you’re going to have to fill in a Self Assessment tax return and pay your tax bill. This is done a year in arrears, so you have some time, but you’ll need to register as self-employed with HMRC straight away.

There is no need to register for VAT until your business has a turnover of more than £85,000 a year, but some businesses might benefit from this even if they’re earning less than the limit.

You will also need to make sure you’re covered in case something goes wrong, so it’s important you have business insurance. And because you no long have access to employee benefits, you might want to look at personal insurance as well.

But, you’ll also need to plan ahead, for both the good and bad. How would you pay to repair your car if it broke down, or take on staff if you got very busy?